Our growing population of senior citizens is struggling to afford the basics as prices for everything from milk to medicine has shot up‚ while Social Security benefits have remained the same.
Our Woodland Hills bankruptcy attorneys understand that many of these seniors may be running up debt‚ as Medicare and Social Security benefits may not be enough to cover it all.
The good news for these individuals is that Social Security benefits‚ retirement funds‚ pensions and 401(k)s are protected in the course of a Chapter 7 bankruptcy. Social Security benefits are also not counted in the means test in determining eligibility for a Chapter 7 and in a Chapter 13‚ it’s not used as income in determining the amount you would have to pay back to unsecured creditors.
Federal law also has protections in place for Social Security benefits that you’ve already received. (This is why it’s best to have Social Security payments deposited into a separate account for a period of time before you file for bankruptcy‚ as it reduces the potential for error and keeps the process more streamlined.)
The Social Security Administration just announced there would be a benefits increase next year of 1.7 percent. Of course‚ any boost is welcome‚ but this really won’t have much impact for the average senior‚ about 56 million of whom receive Social Security support. Someone receiving $1‚130 a month would only see their monthly check increase by about $20.
Part of the problem is the way that inflation costs are calculated. Currently‚ they are based on the spending habits of workers from all ages. But seniors don’t spend the way younger folks do. Typically‚ their main expenses are food‚ medical care and gas – all of which have risen disproportionately to other consumer goods‚ according to the American Institute for Economic Research. For example‚ Medicare costs spiked more than 4 percent from last year‚ food prices rose by about 2 percent and gas jumped by nearly 7 percent.
Seniors are also struggling to pay mortgages‚ insurance‚ utility bills and more. In addition, some are in the undesirable place of helping out both elderly parents and adult children – and everyone has been hit by the financial crisis.
One couple recently profiled had a combined monthly income of about $3‚100 a month. That may sound like a lot‚ but his wife‚ who suffered a brain hemorrhage two decades ago‚ continues to decline in health. They pay nearly $1‚000 a month for rent‚ about $850 a month for things like food and other basic expenses. Then they dole out another $1‚080 on phone‚ Internet‚ electricity‚ water‚ car insurance‚ credit card payments and medical bills. What’s left over they try to save for unexpected expenses‚ but it isn’t much. They don’t take vacations and only eat out on rare special occasions. They don’t purchase Christmas presents or go out to shows. So when the wife recently fell ill‚ they had to put the $1‚000 expense on a credit card. That doesn’t cover the cost of additional medications she needs now too.
That 1.7 percent increase next year? That will mean about $50 extra a month.
If you are a senior on a fixed income struggling with debt‚ we’re here to help.
If you are facing Chapter 7 bankruptcy in Woodland Hills‚ contact Cal West Law to schedule your free consultation. Call (800) 568-0707.
Additional Resources:
Seniors on Social Security squeezed by rising prices‚ Oct. 16‚ 2012‚ By Blake Ellis‚ CNN Money